Green Investing Comes to the Philippines: What the SEC’s New Green Equity Rules Mean for Companies and Investors

By: Jean Francois "Punch" Rivera III and Camille Alexandra Prollamante

Sustainability is no longer just a branding strategy.

For many businesses today, environmental compliance is slowly becoming part of how companies attract investors, raise capital, and position themselves in the market. Around the world, investors are increasingly looking beyond profitability alone. They also want to know whether the companies they invest in are environmentally responsible.

The Philippines is now moving in the same direction.

In 2025, the Securities and Exchange Commission issued SEC Memorandum Circular No. 13, Series of 2025, which introduced the Guidelines on Philippine Green Equity.

At first glance, the concept sounds technical. In reality, the objective is fairly straightforward.

The SEC wants to create a framework that identifies publicly listed companies whose business activities are genuinely environmentally sustainable. Companies that qualify may apply for a “Philippine Green Equity” label for their shares.

That label is more than symbolic.

In modern capital markets, sustainability classifications increasingly influence investor decisions. Environmental, Social, and Governance or ESG investing has grown significantly worldwide, and many institutional investors now actively screen companies based on sustainability metrics before investing.

The problem, however, is that not every company claiming to be “green” actually is.

That is where the new SEC rules come in.

Under the Guidelines, companies cannot simply market themselves as environmentally sustainable without meeting measurable standards. To qualify, a publicly listed company must satisfy several requirements designed to ensure that its operations are substantially connected to legitimate green activities.

Among the most important requirements is the revenue threshold.

More than fifty percent of the company’s revenues must come from what the Guidelines classify as “Green Activities.” Similarly, more than fifty percent of the company’s investments and expenditures must also be directed toward such activities.

The SEC also imposed limits on fossil fuel exposure. Companies deriving more than five percent of their revenues from fossil fuel-related activities may not qualify for the Green Equity label.

In short, the rules attempt to separate companies that are substantially sustainable from those merely using sustainability as a marketing angle.

Importantly, compliance is not left entirely to self-reporting.

The Guidelines require an independent external reviewer to assess whether the company actually satisfies the standards. The reviewer must possess expertise in sustainable finance and ESG practices and must issue a formal assessment report.

That requirement matters because credibility is the entire point of the system.

Without independent verification, sustainability labels risk becoming meaningless. Investors need assurance that environmental claims are supported by measurable standards rather than carefully crafted public relations campaigns.

The SEC’s move also reflects a broader global trend.

International financial markets are increasingly integrating sustainability standards into investment frameworks, lending practices, and corporate disclosures. Philippine regulators are now attempting to align local practices with international sustainable finance standards such as the ASEAN Taxonomy for Sustainable Finance and the Philippine Sustainable Finance Taxonomy Guidelines.

For companies, the potential benefits are obvious.

A recognized Green Equity label may improve investor confidence, attract sustainability-focused funds, and strengthen public perception. In an increasingly ESG-conscious market, environmental compliance may eventually become a competitive advantage rather than merely a regulatory concern.

Still, companies should not assume that the designation is permanent.

The SEC Guidelines impose continuing compliance obligations. Companies granted the label must submit annual assessment reports, and the Philippine Stock Exchange will monitor ongoing compliance. The SEC may suspend or withdraw the designation for non-compliance, material misrepresentation, or disclosure failures.

That alone should encourage companies to treat sustainability commitments seriously.

The larger significance of the Guidelines may go beyond compliance itself.

For years, environmental responsibility was often viewed as optional or secondary to profitability. Today, regulators and investors increasingly view sustainability as part of long-term financial stability and corporate governance.

Whether Philippine companies are fully prepared for that shift remains to be seen.

What is clear, however, is that sustainability is no longer confined to environmental advocacy alone. It is now entering boardrooms, investment portfolios, securities regulation, and ultimately, the business strategies of companies seeking long-term capital and public trust.